Sri Lanka Customs sets 2026 revenue target at Rs2,207bn, marking a 13.5 percent reduction from last year. Officials attribute the decline to expected lower car imports, following record collections driven by vehicle taxes in 2025.
Revenue target lowered as vehicle imports expected to decline in Sri Lanka
Sri Lanka Customs has announced a revenue target of Rs2,207 billion for 2026, reflecting a 13.5 percent decline compared to last year. The drop is largely attributed to an anticipated fall in vehicle imports, which contributed significantly to the previous year’s record collections.
In 2025, Customs exceeded expectations, collecting Rs2,551 billion, surpassing the revised target of Rs2,241 billion. The 2025 performance represented a 64 percent increase over 2024, largely fueled by vehicle import taxes, which alone generated approximately Rs870 billion. Strong enforcement, improved valuation practices, and a rebound in imports after years of contraction were key drivers of this growth.
For 2026, the estimated revenue from vehicle import taxes is set at Rs266 billion, a sharp 69.4 percent drop from last year. This anticipated decline is consistent with projections of lower car imports, reflecting both market trends and policy measures aimed at managing foreign exchange reserves.
Officials highlight that 2025’s record collections were also supported by stricter monitoring of under-invoicing and misdeclaration of goods. Customs enforcement measures, alongside accurate valuation practices, helped maximize revenue from the available import volumes. Analysts note that currency fluctuations also played a role; the Sri Lankan rupee depreciated from Rs292 to the US dollar in December 2024 to Rs310 by December 2025, effectively increasing the local currency value of import duties.
Following the economic crisis of 2022, imports had declined sharply due to restrictions imposed to conserve foreign exchange. As the country gradually reopened trade channels, Customs revenue rebounded strongly. The 2025 performance, however, set a high benchmark, and the 2026 target reflects more cautious projections in line with expected reductions in vehicle imports.
The reduction in the overall revenue target for 2026, while significant, does not indicate a weakening of enforcement or operational efficiency. Rather, it aligns with structural changes in the import market, particularly in high-tax categories such as vehicles. Officials also note that other revenue streams, including duties on industrial and consumer goods, are expected to provide more stable contributions, partially offsetting declines in vehicle-related taxes.
Customs authorities continue to emphasize compliance and risk-based monitoring, focusing on preventing revenue leakages through under-invoicing or misdeclaration. Analysts suggest that while vehicle taxes previously contributed disproportionately to overall collections, a broader approach to enforcing duties on all import categories will sustain government revenue in the medium term.
The 2026 target also reflects macroeconomic adjustments and fiscal planning considerations. With imports expected to remain below peak levels, Customs aims to manage expectations while ensuring that enforcement measures remain effective and equitable. By maintaining high standards of valuation and documentation, authorities are confident that revenue can be collected efficiently without resorting to abrupt policy changes.
Observers note that Customs revenue performance has become a key indicator of economic activity, particularly in trade-sensitive sectors. While the drop in vehicle imports may reduce revenue in 2026, it may also encourage diversification of import patterns and promote more balanced consumption across other sectors.
In summary, Sri Lanka Customs’ 2026 revenue target of Rs2,207 billion represents a strategic adjustment to anticipated market conditions. It underscores the continued importance of enforcement, valuation accuracy, and compliance monitoring, even as high-value categories like vehicles contribute less than in the previous year. By managing expectations and focusing on sustainable collection practices, Customs aims to maintain a stable revenue flow for government operations in 2026.